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Vice Chairman Rodney Hood Dissenting Comments on the NCUA Board Vote on New Data Collection Requirements

May 22, 2008, Alexandria, VA - I want to thank the Outreach task Force for your hard work on your report. While I greatly appreciate your efforts, I find it difficult to support your recommendations on new requirements for data collection.  Given the subprime mortgage debacle in the broader financial markets and the ripple effect those events have played and will likely continue to play in the credit union system, I believe that moving forward with this decision today is ill-advised and poorly timed. 

I understand that the Agency has wrangled with data collection for almost 17-years, well before this current board was appointed.

As a safety and soundness regulator, I believe that during this current financial market turbulence, the Agency should marshal its resources toward keeping credit unions sustainable and vibrant --- so that they can serve as a part of the solution to some of the issues facing the American economy, especially as it relates to providing access to affordable capital.  Likewise, I believe that this is the time for credit unions to focus their energy on balance sheet management, ROA, risk mitigation, product development, and an entire host of other activities that help them meet the needs of their member-owners.  This is not a time for them to be distracted.

In addition, I don’t support data collection because, in my opinion, it teeters on the brink of imposing Community Reinvestment Act (CRA) - like requirements on federal credit unions. I served as a CRA Officer for one of the largest banks in America and find great similarities with the data I collected then and what the Agency proposes tracking today, especially as it relates to lending data, service data, and geo-coding.  Let’s not forget, CRA was created as a punitive measure in 1977 to force banks to make loans available to all customers in their service area.  Since joining the NCUA board, I have stated in numerous presentations my opposition to CRA for credit unions or anything that resembles it.  In fact, even before all the credit union trade groups had made their minds up about this measure, I was opposing it due to its similarity to CRA.

While I appreciate the agency staff’s efforts to allay my CRA concerns by highlighting that all credit union data would be presented and reported in the aggregate, I surmise that it would only be a matter of time before our detractors push for more detailed reporting at the local credit union level.  In the past few weeks, powerful members of Congress have openly stated their desire and willingness to impose CRA requirements upon credit unions.  Today’s data collection recommendation brings this desire one step closer to fruition. 

There is no guarantee that CRA Advocates in Congress will be completely satisfied with federal credit union data in the aggregate. How will they measure it?  How does it compare to other stakeholders in their districts?  I believe these questions will lead to “CRA Creep,” especially if those who request and receive the data examine it through a CRA lens.

As I serve the remaining months of my term on the NCUA board, I simply don’t want my legacy to be known for laying the groundwork for CRA to creep into federal credit unions.  I want to work to strengthen the federal charter, not weaken it.  Therefore, I will not be supporting your recommendation.

Thank You.